Silver Is The Metal To Watch

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Fundamentals:

Escalating inflationary pressures have exerted downward pressure on the gold market, although it maintains crucial support for now, as per analysts' observations. Despite concluding its second consecutive week with losses, gold has rebounded from its nadir, notably clinging to the critical $2,000 per ounce level. April gold futures were last recorded at $2,025.60 per ounce, reflecting a marginal decline of 0.64% from the previous Friday.

Analysts attribute gold's struggles to unexpectedly high consumer and producer prices, prompting investors to delay expectations of the Federal Reserve's easing measures. Forecasts indicate a mere 10% chance of a rate cut in March, with a modest 33% likelihood in May. Nonetheless, confidence persists that the Fed may commence rate reductions by June.

Ole Hansen, Saxo Bank's head of commodity strategy, acknowledges the possibility of further short-term selling pressure on gold but remains bullish in the long run. He emphasizes the market's anticipation of future U.S. rate cuts as a determinant factor for gold's trajectory.

Meanwhile, Barbara Lambrecht, Commerzbank's commodity analyst, anticipates limited movement in gold in the immediate future due to conflicting investor sentiments regarding the Fed's rate trajectory.

As markets brace for the closure on Presidents' Day, analysts suggest a keen focus on the Federal Reserve's January meeting minutes for potential insights affecting gold's sensitivity to the timing of the central bank's initial rate cut.

In a contrasting view, Julia Cordova, Founder of Cordova Trades, expresses optimism for silver's performance, foreseeing it outpacing gold significantly in the upcoming week. Similarly, Michele Schneider, MarketGauge's director of trading education and research, leans towards silver, citing its robust industrial demand amidst concerns over rising inflation. Silver's resilience, holding steadfast at $22 per ounce and testing resistance at $23.50 per ounce, highlights its upward momentum, closing the week with a 7% uptick from its lows.

Let's take a look at the Silver weekly standard deviation report published in the Market Place section and see what short term trading opportunities we can identify.


SILVER: Weekly Standard Deviation Report

Feb. 18, 2024, 12:38 PM ET

Summary

  • Silver Future's closing price above 9-day SMA indicates bullish trend momentum for the week.
  • Traders advised to take profits on corrections at specific price levels.
  • Next significant cycle turn date mentioned as February 28, 2024.

(Click on image to enlarge)

silver

silver weekly (TOS)

  1. Weekly Trend Momentum:

    • The closing price of Silver Futures at 23.48 is above the 9-day Simple Moving Average (SMA) of 23.31, indicating a bullish trend momentum for the week.
    • If the market closes below the 9 SMA, it would suggest that the bullish trend is losing strength and shifting to neutral.
  2. Weekly Price Momentum:

    • Similarly, the close above the 9 SMA at 23 also confirms bullish weekly price momentum.
    • A close below this SMA would turn the short-term trend to neutral.
  3. Weekly Price Indicator:

    • Traders who are short (betting on the price going down) are advised to take profits on corrections at the 22.45-21.43 levels.
    • Those who are long (betting on the price going up) should use the 21.43 level as a stop for a monthly stop close only and keep their orders good till cancelled.
  4. Profit Taking Strategy:

    • For long positions, it's recommended to take profits as the price reaches 24.03-24.59 levels within the month.
    • For short positions, the advised profit-taking levels are between 22.45-21.43.
  5. Trading Cycles:

    • The next significant date for a cycle turn is mentioned as February 28, 2024.
  6. Overall Strategy:

    • If you are long on Silver Futures, consider taking profits if the price reaches between 24.03 and 24.59.
    • If you are short, look to take profits if the price corrects to between 22.45 and 21.43.

This is a snapshot of a trading strategy based on standard deviation analysis. Always remember that trading involves risk, and this technical outlook should not be considered as the sole basis for any trading decisions. It's also vital to consider market news, fundamental analysis, and other indicators before making trade decisions.


More By This Author:

Gold: All Quiet Before The Storm
Gold: Load Up The Truck
Gold: Market Responds To Federal Reserve's Balancing Act, Eyes On Possible Reversal

Disclosure: I/we have a beneficial long position in the shares of SILJ either through stock ownership, options, or other derivatives.

Disclaimer: The information in the Market Commentaries ...

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